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China’s diplomatic stance in South Asia

Author:

Ashis Biswas

A recent move by Sri Lanka and Bangladesh to bring China within the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (BIMST-EC) regional grouping poses a diplomatic challenge for India. Given India’s abandonment of its initial interest in the BCIM Economic Corridor project, which upset its nearest neighbours Myanmar and Bangladesh, it may be difficult to prevent China from eventually securing a place in the BIMST-EC organisation, observers feel.
Bangladesh pushed for the inclusion of China in the Bay of Bengal Initiative at the last meeting in Dhaka some time ago to review the progress of the project---an economic corridor linking China, Myanmar, Bangladesh and India. Representatives of member countries attended. The group felt that while an immediate inclusion of China was not possible, there was no reason why China could not come in as an observer.
Sri Lanka, a participating member of the BIMST-EC but not of the BCIM, has also indicated its support for the idea.
India’s reservations about the BCIM project deepened after China formally declared it as part of its ambitious One Belt One Road (OBOR) global infrastructural development initiative. It needs stressing that India did not initially oppose the concept of improved regional rail and road connectivity, seeking to link South Asia with its more advanced Southeast Asian neighbours. The first detailed discussion on the project took place in 1999 at Kunming in the Yunnan province of China.
The Chinese idea of reviving what used to be called the old Southern Silk Road evoked a good response from several states in India.. Analysts had pointed out that it would provide a linkage for India’s Northeast region with the Bay of Bengal and the more developed South China region as well. With greater communication, easier movement of goods and people and the resultant growth of trade and business, the economies of the countries involved would be integrated more closely.
A Chinese analysis pointed out how trade within the South Asia region, despite the difficulties between India and Pakistan, had grown by 5% in 2014, touching $111.22 billion, over a year.
By the time the NDA came to power in 2014 under Prime Minister Narendra Modi, Indian policymakers took a fresh look at the BCIM. What put Delhi off were certain negative features that could not be ignored easily.
It was felt that except for Tripura and Manipur, the rest of the Northeast would not be accessed effectively by the corridor. However, trade and industry circles in Assam and West Bengal were more receptive than others.
India might have acted in self-interest in going lukewarm on the BCIM, but in the process both China and Bangladesh were displeased. Their officials expressed their disappointment publicly, even as they urged upon India to expedite the pending work and schemes that had been planned in the West Bengal sector.
While China-India tensions have continued and are at its worst at the time of this writing over the recent developments at the Doklam trijunction, Beijing enjoys relatively better relations with Dhaka and Colombo. President Xi Jinping had announced a generous $22 billion aid and development package for Bangladesh during his last visit. With Sri Lanka, after some initial niggles, China has succeeded in setting up naval facilities at Hambantota, after upgrading certain facilities at Pakistan’s Gwadar port. Both ports are strategically important for Chinese interests in the region.
On the other hand, India has refused to use the facilities at the China-sponsored C-Pec highway, despite Beijing’s urgings. The road virtually bisecting Pakistan runs through the disputed POK region.
Within the BIMST-EC, the establishment of the proposed free trade area (FTA) has been stalled because of India’s insistence on reworking some terms of the existing tariff, especially in retail trade with Thailand. These were last worked out in 2004 and the terms favour some US and Japanese companies working out of Thailand. In 2014, India exported items worth $22.3 billion within the BIMST- EC, and imported $9.3 billion worth of goods. The growth in exports year on year was 16.6% and for imports,8%. But significantly, India runs a trade deficit with Thailand that it naturally wishes to address by proposing a restructuring in some cases.
This has been opposed by Thailand with support from other members, who feel that India is taking too long over the creation of the FTA.
Given the diplomatic leverage China enjoys with Dhaka and Colombo, there is no reason to believe that Bangladesh and Sri Lanka would not welcome a larger Chinese participation in the BIMST-EC. The strengths that China would bring to the table are obvious, in terms of immediate investments, its expertise in carrying out infrastructural projects within a timeline etc.
As for India, it cannot match cash–rich China in terms of sparing large sums of instant cash for specific projects. While it is engaged in infrastructural projects in Bangladesh and Myanmar, in both countries most schemes, whether in road building, power generation or upgrading port facilities, are running well behind schedule.
In any case smaller countries like Bangladesh and Sri Lanka are always going to benefit as long as the two larger Asian countries compete to expand and consolidate their respective spheres of influence in Asia, by playing off one against the other. This is the primary reason why India will find it difficult to keep China out of BIMST-EC indefinitely, having developed cold feet over the BCIM already.
Also India cannot afford to stonewall too strongly against China, seeking to block its entry into regional groupings---especially not after China has sponsored India’s full membership within the SCO, the AIIB and other institutions. (IPA)